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LLB is considering the development and marketing of a new product. Development costs
will be Rs. 28,000. If the product return is successful (and there is a 20% probability that this
won’t be case) and it is marketed, it is estimated that there is a 30% probability of it being
extremely successful and producing an expected profit of Rs. 86,000, a 45% probability that
it will be fairly successful and produce an expected profit of Rs. 21,000 and a 25%
probability that it will not be successful at all and make a loss of Rs. 35,000.
Required:
Calculate the expected value from the project.
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